Energy & Capital

Trans-Afghan Natural Gas Pipeline Project

India Allowed to Create Company

Written by Swagato Chakravorty

Posted February 11, 2013 at 4:25PM

Late last week, India’s federal cabinet approved the forthcoming formation of a company to develop a trans-Afghanistan pipeline project aimed at bringing in natural gas to the country from Turkmenistan.

The project, estimated at $7.6 billion, has involved extensive discussions between India, Afghanistan, Pakistan, and Turkmenistan for more than twenty years.

The TAPI pipeline, as it is currently called, will span 1,800 kilometers and is expected to come online by 2018. The newly-formed company is to begin preliminary studies and submit a project report soon.

The cabinet will permit GAIL Ltd. (NSE: GAIL) of India to join the company, provisionally named TAPI Ltd., as Fox Business reports. All of the other nations have signified their agreement to the plans thus far.

GAIL will provide an initial investment of around $5 million, with the other nations investing similar amounts through their companies.

Fox Business quotes the cabinet report:

"An active interest in the project by all the partner countries at this stage would sustain the credibility of the project, and generate interest in the international market and could eventually pave the way for selection of an appropriate consortium leader in the future," it said.

It’s an impressive achievement considering the often tense relationships between some of the countries involved. The Taliban problem in Afghanistan and Indo-Pak border issues still remain a concern.

Further, the pipeline will pass through the Baluchistan province in Pakistan, where separatist tendencies and insurgencies create another worrisome issue.

Finally, since Turkmenistan currently does not permit international companies to invest in the country’s oil and gas fields, interest from the big oil majors is low.

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